Budget cuts are booming business for this Washington contractor

While most contractors are being squeezed by federal budget cuts, Metalogix’s business is growing because of them. From left: Pat Park, vice president for the public sector, Steven Murphy, CEO, Jignesh Shah, Chief Marketing Officer and Rick Rolandi, Chief Financial Officer, in the D.C. office. (Evy Mages/For The Washington Post)

At a time when most contractors’ top lines are being squeezed by federal budget cuts, Metalogix’s business is growing because of them.

Four years ago, the District-based IT contractor didn’t even have a public sector business, chief executive Steven Murphy said. Today, 20 percent of the company’s $70 million in annual revenue comes from government work.

That’s because companies such as Metalogix are called in when agencies pound the drumbeat of efficiency. Metalogix builds software to improve government collaboration over file management systems such as Microsoft’s SharePoint. The company helps departments consolidate their data centers and provides security software for agencies that have migrated content to Internet-based systems.

This is what Murphy calls “the steak and potatoes” of public sector work today.

“The budget cuts have, ironically, been a boon to our business,” Murphy said. “Even in good economies, people want to better organize themselves. But when budgets get tight, these problems are exacerbated.”

Metalogix is not alone in this area. Companies such as Quest Software, which is now a part of Dell; New Jersey-based AvePoint; and others also specialize in the business of making government more productive. All of these companies have experienced steady growth in the past few years as federal agencies try to do more with less.

When Metalogix opened its Friendship Heights office in 2010, the company’s annual revenue was about $4 million and its D.C. office employed two people, including Murphy and Rick Rolandi, Metalogix’s chief financial officer. Since then, the business has grown by more than 20 percent, year-over-year. It now counts more than 80 employees in the Washington office, and more than 250 on seven continents, including Antarctica, Murphy said.

He also attributed the changing face of Washington as a factor in the company’s growth. At the Metalogix office, located right across from the Metro, a group of mostly millennial workers sit on high stools in an open office environment.

Washington “is dynamic and fun and the talent pool is as rich as San Francisco,” said Murphy, who used to work in Silicon Valley.

The majority of Metalogix’s business still comes from the commercial sector. Government clients include the Army, Air Force and the Defense Information Systems Agency. Company executives said they wanted to maintain a mix of public and private work, a common theme among contractors. The business is backed by venture capital firms Bessemer Venture Partners and Insight Venture Partners.

What sets Metalogix apart, according to Murphy, is that its software is “platform-neutral.” The company’s software is compatible with cloud services offered by Microsoft, Google, Amazon Web Services and other providers.

Looking ahead, the company sees cybersecurity as its fastest area of growth, said Pat Park, vice president of the company’s public sector division. As government agencies move to the cloud, they’re increasingly concerned about managing security and guarding against insider threats, Park said. Murphy added that former government contractor Edward Snowden’s revelations about mass surveillance also prompted more interest in cloud security.